Capital Markets Day. 5 June 2014 Leiden the Netherlands

Transcription

1 Capital Markets Day 5 June 2014 Leiden the Netherlands

2 Contents ExecuLon in a changing world Willem van Duin, Chairman of the ExecuVve Board Asset Liability Management at Achmea Huub Arendse, Chief Financial Officer Risk management at Achmea Marco Vet, Group director Risk & Compliance

3 ExecuLon in a changing world 5 June 2014 Willem van Duin Leiden

4 ExecuLon in a changing world With AcceleraVon & InnovaVon we are wrivng a new episode in the history of Achmea We are acceleravng our customer focus while aiming for more sustainable returns We are building on our strong brands, leading market posivons and the solid financial foundavon as achieved by our previous improvement program House of IniVaVves We are on schedule to reach our first milestones and are determined to realize our goals in our management agenda

5 Contents IntroducLon to Achmea Change program AcceleraVon & InnovaVon

6 Achmea was founded more than 200 years ago Founding of mutual cooperalve in Achlum Founding of health insurer Zilveren Kruis AVCB and Zilveren Kruis merged into Achmea Achmea merged with Rabobank subsidiary Interpolis Merger with DFZ and acquisilon of Independer Founding of Centraal Beheer Centraal Beheer and Avéro merged into ACVB AquisiLon of Interamerican Greece Merger with Agis and acquisilon of Sigorta Turkey CelebraLng our bicentenary

7 Our cooperalve idenlty is supported by our shareholder base Shareholders (ordinary share capital) 29% Rabobank 6% * 65% Achmea AssociaLon Our largest shareholders, Achmea AssociaVon and Rabobank, are both cooperavve organizavons The statutory mission of Achmea AssociaVon is to look afer the collecvve interests of our customers and to support the convnuity of Achmea Our other shareholders are mainly non- listed European insurance organizavons with cooperavve roots ** BCP Group (2.8%), Gothaer Allgemeine Versicherung (0.5%), Gothaer Finanz Holding 0.6%, Schweizerische Mobiliar Holding 0.7%

8 We have a strong commercial alliance with Rabobank New insurance sales through Rabobank (% Interpolis) Our insurance products are distributed through the banking channel under our Interpolis label PreferenVal distribuvon of Interpolis products through Rabobank branches; approximately 98% of retail insurance products sold through Rabobank are Achmea insurance products 98% 95% 77% Currently, only 1 out of every 4 customers of Rabobank is insured through Interpolis; both Achmea and Rabobank aim to increase this Retail SME Wholesale Greenfield operavon in Australia in cooperavon with Rabobank started in 2013, with a possible extension to other growth markets. Focus is on non- life, mainly agricultural sector such as live stock, machinery, crop insurance etc.

9 We have leading posilons in our core markets Property & Casualty Market share * Achmea 20% Delta Lloyd a.s.r. ING Allianz Other Health Achmea 32% CoopraVe VGZ CZ groep Menzis Other Income ProtecLon a.s.r Achmea 18% ING Goudse Delta Lloyd Aegon Other Individual Life ING Achmea 14% SNS Reaal Delta Lloyd a.s.r. Aegon Other Pension Insurance ING Aegon SNS Reaal Achmea 13% Delta Lloyd a.s.r Other ** Figures relate to full year 2013

10 We have a solid financial posilon OperaLonal result ( mln) Net profit ( mln) 469 Gross wrieen premiums ( mln) 20,233 20, Gross operalng expenses ( mln) 2,787 2, % Solvency ralo 212% Total equity ( mln) 10,483 9,

11 Clear long- term strategic choices for our porgolio Channel Banking distribulon Direct distribulon Broker distribulon Brand Product Group Property & Casualty Health Income ProtecLon Life - standardised Pension - standardised Core proposilon: strengthen Develop to core proposilon Increase scale to core proposilon Banking products Life not standardised Pension not standardised Complementary to insurance products Separate and manage internally or externally Our strategic choices apply both to our Dutch and internavonal acvvives

12 Contents IntroducVon Change program AcceleraLon & InnovaLon

13 We made significant progress in recent years With our improvement program `House of IniVaVves and other inivavves we reduced our costs with around 450 million from 2008 to 2013 The number of FTEs has decreased consistently over the years with around 5,000 on Group level Significant progress in reshaping our business pornolio: divesvng non- core legacy operavons in Cyprus, Luxembourg, Belgium, France, Romania and Bulgaria as well as occupavonal health services provider Achmea Vitale Closed life book managerially separated to control costs while keeping high level of service AcquisiVons to strengthen the Group s core acvvives and commercial effecvveness, such as health insurer De Friesland Zorgverzekeraar and online aggregator Independer

14 but economic and business condilons remain challenging Economic growth limited in coming years Income protecvon results under pressure by hybrid market structure PoliVcal and public pressure on health profits Decline in demand and increasing voluntary own risk levels especially in supplementary health insurance ConVnued low interest rates put results pension and life business under pressure Drain on tradivonal life book by bank savings Limited trust in insurance sector Highly compevvve and mature Dutch market: pressure on margins New players entering the market Increasing regulatory demand Customers view insurance as less obvious impaclng our earnings model

15 and consumer behaviour is changing rapidly Percentage of sales per medium (number of sales): online on the rise 80 Individual insurance (P&C, Health and Life combined) 80 Health insurance Online In person via an adviser By telephone By mail Via employer ** Source: GfK, TOF Tracker ParVculier

16 AcceleraLon & InnovaLon: a new episode for Achmea Change program aimed at improving online customer service while bringing down operavonal costs and FTEs New measures in place as consumer behavior changes faster than ever and pressure on earnings model remains New episode in history of our Group; reshaping the way we do business Good starvng posivon to realize goals of AcceleraVon & InnovaVon with strong financial and commercial posivon combined with unique idenvty Good starvng point following successful earlier rolled out measures OperaVonal improvements and other inivavves will lead to a reducvon of staff with 4,000 FTE and a drop in our operavonal expenses with an addivonal 450 million unvl the end of ,200 FTEs - 4,000 FTEs OperaLonal expenses million 13,200 2,700 2,

17 Our management agenda is made up of four elements Customer driven Changes for employees Redesign of distribuvon organisavons Investments in online services of our brands Customer s voice a permanent factor in our business operavons Responsible return Customer driven Medewerkers Investment in sustainable employability via training and support Flexible employment terms for even berer customer service Good employership is key CompeLLve costs Greater commercial effecvveness through dynamic pricing Sharper pricing and Vghter revenue management Responsible return Employees CompeVVve costs Further reduce complexity in IT and migrate to generic IT systems Cost- reducvon target now 450 million in savings by year- end 2016

18 IniLaLves to serve our customers beeer Customer driven Redesign of distribuvon organisavons Investments in online services of our brands Customer driven Customer s voice a permanent factor in our business operavons Medewerkers Responsible return Employees CompeVVve costs CompeVVve costs

19 IniLaLves to achieve a responsible return Responsible return Greater commercial effecvveness through dynamic pricing Customer driven Sharper pricing and Vghter revenue management Medewerkers Employees Responsible return CompeVVve costs CompeVVve costs

20 IniLaLves to achieve compellve cost levels CompeLLve costs Customer driven Employees Further reduce complexity in IT and migrate to generic IT systems Cost- reducvon target now 450 million in savings by year- end 2016 Responsible return CompeVVve costs CompeVVve costs

21 ExecuLon in a changing world With AcceleraVon & InnovaVon we are wrivng a new episode in the history of Achmea We are acceleravng our customer focus while aiming for more sustainable returns We are building on our strong brands, leading market posivons and the solid financial foundavon as achieved by our previous improvement program House of IniVaVves We are on schedule to reach our first milestones and are determined to realize our goals in our management agenda

22 Asset Liability Management at Achmea 5 June 2014 Huub Arendse Leiden

23 Key messages We have an adequate and prudent investment policy which is based on the profile of our liabilives We aim to cover 100% of interest rate risk to meet our liabilives We have a well- diversified investment pornolio Over the last two years, we have gradually shifed to more credits in our investment pornolio We have further implemented our mulv asset manager strategy

24 S&P ralng update RaLng affirmed Financial strength ravng A+ Strong business risk profile Very strong financial risk profile ERM score revised to strong Improved risk management culture Improved overall risk controls Introduced strategic risk management Outlook revised to negalve Decline in excess capital at the 'AA' level Subdued earnings put pressure on fixed- charge coverage

25 Strong capital commitment We reiterate our strong commitment to a very strong ( AA ) capital posivon Current developments Significant change program aimed at improving earnings level over the coming three years Refinancing program at favorable condivons, e.g. dividend percentage of 5.5% negovated on preference shares Reinsurance of 550 million annuity pornolio with an inival capital relief effect of around 60 million under the S&P capital adequacy model

26 Contents IntroducLon to our investment approach Taking a closer look at our investment pornolio Recent developments

27 Overview of our Assets under Management ObjecLve Our goal is to allocate the premiums contributed by our customers as responsibly and efficiently as possible Facts * 44.8 billion Investments for risk and expense of Achmea 22.6 billion Investments for risk and expense of policyholders 53.7 billion Fiduciary investments of Syntrus Achmea billion Total investment pornolio of Achmea Main asset managers ** Figures relate to full year 2013

28 Overview of our investment process Legal enlles/divisions and Capital Management Asset Management LiabiliVes per legal envty ReplicaVng pornolio per legal envty Matching / hedging per legal envty Determine risk appevte Group Capital allocavon Pornolio management Monitoring & measurement Determine market risk Group Return pornolio allocated per legal envty

29 Risk appelte statements Risk policy Achmea has an adequate and prudent investment policy which is based on the profile of its liabilives Capital allocalon Achmea is primarily an insurance company and therefore chooses to allocate most of its (economic) capital to insurance risk The market risk of the investments that are not held to cover the insurance liabilives and the associated counterparty risk may not exceed the diversified total of the insurance risks (measured at 99.5% confidence level)

30 ConstrucLng the replicalng, matching and return porgolios Matching and overlay management Our policy is to cover 100% of interest risk (swap) to meet our liabilives (including guarantees) in market value terms both now and into the future and thereby avoid addivonal capital requirements. Cash flows of the liabilives are translated into a replicavng pornolio, which in turn is matched with a matching pornolio consisvng of fixed income investments and interest rate derivavves such as receiver swapvons and swaps. Receiver swapvons are mainly used to cover opvonality in liabilives consisvng of an interest component and a interest volavlity component caused by profit sharing. The matching pornolio also consists of different types of credits (corporate bonds, ABS/ RMBS, loans) to match, where relevant, the illiquidity spread priced- in above the risk free rate. This approach will be developed further under influence of SII (a.o. matching premium specificavons). Return porgolio The target of the return pornolio is to maximize returns given the risk budget. This is done by construcvng a well- diversified investment pornolio that consists of various asset classes such as fixed- income, equives and real estate.

31 Contents IntroducVon to our investment approach Taking a closer look at our investment porgolio Recent developments

32 Investment porgolio: direct yields 3% 2% Direct yield * (in years) We make a posivve spread in all our lines of business This spread reflects the risk profile of our Group Figures relate to direct returns only 1% Direct yield SWAP 0% Pension & Life Non- Life Health ** Figures relate to year- end 2013

33 Investment porgolio: interest rate matching (including oplonality) Pension & Life DuraLon * (in years) Non- Life Health Assets LiabiliVes We compare the duravon of our assets and the underlying liabilives on a monthly basis Our aim is to keep interest rate sensivvives within a predetermined bandwidth We manage this on a legal envty level We adjust for any negavve deviavon outside the predetermined bandwidth ** Figures relate to year- end 2013

34 Investment porgolio: interest rate sensilvity Effect of interest rate shocks * Non- Life Health Pension & Life Reinsurance Available capital 1,185 2,129 3, Impact - 1.0% shock Impact - 0.4% shock Impact +0.4% shock Impact +1.0% shock Policy limit - 3.0% - 1.0% - 1.0% - 3.0% Actual impact - 1.2% - 0.4% +0.3% +0.6% Policy limit - 3.0% - 1.0% - 1.0% - 3.0% Actual impact - 1.2% +0.5% - 0.5% - 1.1% Policy limit - 4.0% - 1.5% - 1.5% - 4.0% Actual impact - 6.2% - 2.2% +2.0% +5.1% Policy limit - 3.0% - 1.0% - 1.0% - 3.0% Actual impact +2.3% +0.9% - 0.9% - 2.2% ** Figures relate to year- end 2013

35 Investment porgolio: Fund for Future AppropriaLon Legend RevaluaVon Equity Investment income Fixed assets Unrealised part of FFA Realised part of FFA Release from FFA LiabiliVes Movements in insurance liabilives Interest Profit & Loss account (40 bps margin) Interest Interest derivavves

36 Investment porgolio: high- quality Total investment porgolio * ( billion) Investment porgolio for own- risk * ( 44.8 Achmea for own- risk 37% Achmea for risk policyholders 19% Fixed income Deposits 82% 06% EquiVes 03% AlternaVve investments 02% Syntrus fiduciary investments 44% DerivaVves 04% Real estate investments 03% ** Figures relate to year- end 2013

37 Investment porgolio: high- quality (conlnued) Fixed- income porgolio * ( 36.7 billion) By ralng AAA 52% AA 20% BBB <BBB 12% 02% A 12% Not rated 02% By type By sector Government bonds 48% Covered bonds 10% Government 48% UVliVes 0 03% Government related 08% Corporate bonds 22% Financials 31% Industrial 0 02% Loans & mortgages 08% Asset- backed securives 02% ConverVble bonds 01% Fixed- income funds 01% Consumer Energy Z2% 07% Telecom 04% Basic material 02% ** Figures relate to year- end 2013

38 Contents IntroducVon to our investment approach Taking a closer look at our investment pornolio Recent developments

39 Recent developments SWITCH TO CREDITS SWITCH TO DIRECT MORTGAGES We have increased the share of corporate bonds in our investment pornolio to increase returns, improve our matching and anvcipate the Solvency II matching adjustment Current market circumstances provide good opportunives for invesvng in direct mortgages, which is what we are currently implemenvng

40 Key messages We have an adequate and prudent investment policy which is based on the profile of our liabilives We aim to cover 100 % of interest rate risk to meet our liabilives We have a well- diversified investment pornolio Over the last two years, we have gradually shifed to more credits in our investment pornolio We have further implemented our mulv asset manager strategy

41 Risk management at Achmea 5 June 2014 Marco Vet Leiden

42 Contents IntroducVon Risk management at Achmea Achmea s risk profile Achmea s risk management in pracvce Integrated risk management framework

43 Achmea risk management is strong Risk management considered strong by Standard & Poor s S&P ERM score revised to strong on improved risk management culture, improved overall risk controls and the full implementavon of strategic risk management Very solid risk management framework implemented We have implemented a consistent, comprehensive Integrated Risk Management Framework We have implemented solid processes for both capital allocavon, target se{ng, business planning, management control and for product development & tariff se{ng; the ORSA process is an integral part of the business planning process Risk models are not only used for Solvency calculavons, but also as a basis for risk / return measures for decision making Achmea at the forefront of ERM Currently Chairman of the internavonal CRO Forum First internal Solvency II models submired to DNB in pre- applicavon process Fully integrated risk management approach

44 Risk management within Achmea Risk management is part of our cooperavve roots Risk taking is inherent to our existence, managing risks is our core business We have implemented a consistent, comprehensive Integrated Risk Management Framework Achmea is aiming to be the most trusted insurer Following our cooperavve roots, our risk appevte is set with the necessary prudency We have set strong capital and solvency levels We convnuously improve our Risk Management system Importance of Risk Management is recognised at all levels and in all Business units of Achmea and is part of our culture Risk Assessments form part of business decision processes and strategic projects Sustainable value creavon Sustainable value creavon, with Risk Management fully integrated, is key in our financial control processes We have implemented adequate processes for capital allocavon, target se{ng, business planning, planning & control, as well as for product development & tariff se{ng The ORSA process is an integral part of the business planning process

45 Achmea s risk management system is effeclve Integrated Risk Management / Solvency II Risk profile Our Integrated Risk Management Framework (IRMF) supports the implementavon of a consistent Risk Management system and assists in implemenvng Solvency II. Last December we voluntary delivered a single group- wide ORSA report to the regulator. We will do so again at the end of this year. We maintained a prudent risk profile with robust capital We convnue our close monitoring; periodic updates are prepared and necessary acvons are being taken. Risk appevte Value management Control framework Risk AppeVte Statements have been approved by the ExecuVve Board and Audit & Risk Commiree; statements are used in decision making and proved effecvve; Key Risk Indicators, related limits and risk monitoring are in place for all main risk types. We have implemented adequate processes for capital allocavon, target se{ng, business planning, planning & control, as well as for product development & tariff se{ng. Value management is incorporated in monthly management reports. We implemented the Achmea Control Framework to monitor and report quarterly on key risks and related key controls. The Internal Control Statement was approved by Internal Audit.

46 ConLnuous improvements Risk management progress 3 Lines of defense fully implemented RemuneraVon Policy Clearly arvculated RemuneraVon Policy Alignment with regulavons (DNB, AFM, Insurers Code) Business Plan: Strategic Risk Assessment is an integrated part of the Business Plan; results are reported periodically Current project within Finance & Risk focusing on further opvmizavon of risk control and reporvng Risk management acvvives Integrated Risk Dashboard combining financial and non- financial risk monitoring with a clear link to all risk appevte limits Extended use of internal models (parval Internal Model) in commercial decisions and premium se{ng

47 IRMF - Overview Risk management components Risk management process 1 OrganisaVon structure 2 Risk classificavon 3 Risk appevte 4 Policies & procedures 5 Tools & techniques 6 Systems & data Risk process & Information for decision making 7 People, culture & awareness Risk Management is organised along the components of the Integrated Risk Management Framework (IRMF) To ensure an integrated approach all second line of defense funcvons (risk, actuarial and compliance) use the same Risk ClassificaVon, are covered by the Risk AppeVte and use Tools and Techniques which are aligned with each other The Risk Management Process consists of a control cycle of risk idenvficavon- assessment- response- implementavon, with convnuous monitoring and reporvng

48 IRMF - Risk Management Components OrganisaLon structure Three lines of defense Group commieees First line Risk Management embedded in the business - ExecuVve Board (EB), Finance & Risk Commiree and special commirees - Divisions/business unit: business management, Finance & Risk Commirees and special risk commirees Finance & Risk Commieee (F&RC) - CFO (Chair), 3 other EB- members - Directors Finance & Risk of Divisions - Group: Risk & Compliance (R&C), Capital & Value management (C&V) Second line Design and monitor the Integrated Risk Management Framework - Risk & Compliance on group level - OperaVonal Risk managers, Compliance officers and Insurance Risk managers Divisions and OpCo s Product Assessment Commieee (PBC) All risk types represented by: - R&C (Chair), Insurance, Market, operavonal, Compliance - C&V, Legal and Tax - Bank provides informavon, has own approval procedures - OpCo s have own policy Third line Provide addivonal assurance on Governance, Risk Management and Internal Controls - Internal Audit, operavng on both group level and business level Model Approval Commieee (MAC) - R&C (Chair), Model owners, Model developers, Model users, Model validators - With representavon of the Directors Finance & Risk of Divisions as to ensure a good understanding of the Internal Model

49 Risk appelte statements (1) Capital posivon Risk management Available capital is at least equal to economic capital at a 99.95% confidence level at group level. A precondivon is that the minimum retained capital is adequate for: An S&P A ravng. Achmea monitors capital based on S&P requirements (capital required for an AA ravng) and tolerates termporary deviavons to a capital level for an A ravng. Achmea meets capital requirements of the regulator. At least equal to 100% SCR (SII) plus buffer per legal envty (buffer level dependent on impact SII legislavon). The amount of capital is calculated based on models. Achmea is fully aware of the importance of models and applies them in a responsible manner. Achmea has idenvfied risk mivgavng measures to prevent model risk. Achmea s risk management framework safeguards the execuvon, implementavon and monitoring of prudent risk policy. Achmea pursues an adequate counterparty policy (including collateral management) and acvvely monitors counterparty default risk. Achmea has adequate policies for underwrivng, reinsurance and reserving and ensures responsible choices are made for fundamental assumpvons like e.g. mortality tables and yield curves. Achmea has an adequate and prudent policy on investments, based on the profile of the liabilives. Achmea monitors the risks of inadequate or failing processes, people, systems and of external events. Achmea ensures adequate internal control.

50 Risk appelte statements (2) Earnings VolaVlity This statement on stable development of value and economic result will be further developed when more experience has been gained in managing on economic fundamentals. Decision- making takes place based on economic consideravons. Shifs in IFRS results must not be leading. Achmea opvmizes its risk profile so that it contributes to a pricing strategy that is at least around the market median. Product quality Compliance CSR Acceptance policy is driven primarily by solidarity and then profitability. Achmea only automavcally excludes customers/groups of customers based on moral or explicit (irresponsible) risks. Achmea provides customers with products and services that offer security and are predictable, consistent, understandable, transparent and have integrity. Relevant legislavon and regulavon is clustered in themes related to business processes to ensure all legislavon and regulavons are fully applied. Achmea is pro- acvve involved in the social debates which are relevant for the insvtuvon and anvcipates social developments.

51 Achmea s focus is on insurance risk as is reflected in our risk profile Required capital (parlal internal model) * ( 4.0 billion) Achmea s focus is on insurance risk, with 53% of economic capital allocated to insurance- related risks Non- life risk 09% Market risk 31% Life risk 0 21% Health risk 19% Counterparty risk OperaVonal risk 06% 10% Disability risk 04% ** Figures relate to 2013

52 IRMF - Risk Management Components Tools & techniques SCR Internal model Adjustment BSCR OperaVonal Standard formula Market Risk Default Risk Health Risk Intangible Risk Life Risk Non- life Risk Equity SLT Cat Risk NSLT Mortality Premium & reserve Interest rate Mortality Premium & Reserve Longevity Lapse Property Longevity Lapse Disability & Morbidity Cat Spread Disability & morbidity Lapse Currency Lapse Expense ConcentraVon Expense Revision Revision Cat

53 IRMF - Risk Management Components People, culture & awareness Culture, behaviour and risk awareness are embedded in our Risk Framework Tone at the Top Sof controls, measuring conduct & behavior E- learning Basic module on Solvency II regulavon Part of standard HR- cycle when changing funcvon Target group: envre organizavon (Product development, Sales, Finance & Risk) Economic Balance Sheet module Target group: financial funcvons Internal Models module Target group: financial risk management, business funcvons RemuneraLon Risk weighted Monitored by SVM- card; further translated in personal performance Appraisal (board and senior management

54 Risk Management Process Monitoring & reporlng # Report Content 1 Quarterly Risk Report Risk Dashboard OperaVonal Risk & Compliance Report 2 Integrated Risk Analysis Aligned with our business plan process with one extensive report and two updates Monitoring of our risk profile based on our Risk AppeVte Framework (Key Risk Indicators) and Control Framework (Key Risks / Key Controls). Monitoring of our strategic risks for the medium and long- term risks. Monitoring of the ORSA and Recovery Plan triggers. Challenge of our current risk profile where a disvncvon is made between short, medium and long- term risks based on Risk Self Assessments, our ParVal Internal Model and the results of scenario- and stress tesvng. If necessary addivonal acvons are taken which will be monitored in the Quarterly Risk Report. Provides the risk overview for the ORSA Report. Provides input for determining the scenarios to be carried out for the ORSA Report and Recovery plan. 3 ORSA Report Provides insight on the capital adequacy of the coming three- year business plan period based on an integrated test of our strategy, risk management, risk appevte and capital- and liquidity forecasts. Contains the triggers which are monitored in the Quarterly Risk Report and which could lead to a (partly) revision of the ORSA Report. 4 Recovery Plan Near- default scenario s, convngency acvons and crisis management governance. Contains the early warning indicators and triggers which are monitored in the Quarterly Risk Report and which could lead to operavonalizing the crisis management governance. 5 Internal Control Statement Contains a score card which provides informavon on our control level and net risk exposure of last year which is based on our Risk Self Assessments. 54

55 Risk Management Process Monitoring & reporlng Capital Examples limit breaches Capital breaches on Solvency / Capital Adequacy Model S&P s Leverage ravo s Examples aclons (not limited) Capital injecvon, capital relief, change hedging strategy, reduce risk exposure, subordinated loans Liquidity Risk Insurance Risk NegaVve forecast on cash posivon Breaches of reserve adequacy margins Raise debt or equity in internal market, use credit facilives, no dividend payments Increase / decrease reserves Market Risk Counterparty Default Risk The Risk Dashboard is composed by R&C from underlying reports and reported to F&RC, ExecuVve Board and Supervisory Board Breaches on profit at risk for market risk, interest shocks Assets volavlity within 85% - 115% of liabilives volavlity Limit breaches on counterparves Example: Achmea Risk Dashboard H Change investment mix Change hedging strategy Reduce exposure counterparty Obtain addivonal collateral

56 Concluding remarks Solid risk management framework Prudent risk appevte Business decisions are risk weighted Our IRMF is consistently applied throughout the organisavon Behaviour and risk awareness are important elements for Risk Management in day to day business acvvives within the first line of defence The governance is such that all risk types are included in the management cycle and on the agenda of Management Teams and Board of Directors on both group and division/ business unit level Following from our cooperavve roots, our Risk AppeVte is set with necessary prudency Achmea has an adequate and prudent investment policy, based on the liabilives profile Achmea has changed its business model disvnguishing Product and DistribuVon Divisions leading to further efficiency Risk Models are not only used for Solvency calculavons, but are also used as a basis for risk and return measures for decision making Risk and return is opvmised at both group level and division/business unit level

57 Concluding remarks Risk in business plan cycle All risk types are thoroughly managed ORSA is ulvmate risk assessment Risk idenvficavon and assessments are an integral part of the business plan cycle RemuneraVon is both performance and risk related Key Risks and Key Controls are recorded in Achmea Control Framework Market Risk, Counterparty Default Risk and Liquidity Risk are acvvely monitored and managed on group level. Interest rate risks are hedged. Insurance Risk is managed within the Divisions. For financial risk monitoring a Risk Dashboard on group level is used. Non- financial risks are monitored in OR&C reports. Catastrophe risk is annually quanvfied using predominantly externally developed catastrophe models. Reinsurance cover is determined in relavon to the Risk AppeVte. Divisions as well as the Group use scenarios and stress tesvng for berer understanding the risks, both on a quanvtavve as qualitavve grounds. Division Health specifically monitors future risks and acvvely parvcipate in polivcal debates. ORSA connects Business Plan, Risk Profile and Capital planning. Achmea is convnuously aiming to improve the level of risk management throughout the organisavon.